Strong Jobs Report Sends U.S. Stocks Tumbling Amid Rate Hike Fears

U.S. stocks took a hit on Friday after a surprisingly strong jobs report came in, raising the prospect of an interest rate hike by the Federal Reserve.

The Labor Department reported that employers added 162,000 jobs last month, far exceeding the 65,000 forecasters had expected. This development has given policymakers leeway to raise the Fed's benchmark short-term interest rate at their next policy meeting in under two weeks.

Expectations for a rate hike in September increased to 60.4% following the release of the jobs report, up from 49.4% Thursday and 57% a week ago. Jeffrey Roach, chief economist for LPL Financial, said that 'a rate hike on Sept. 16 appears increasingly likely.'

The stronger-than-expected hiring could make matters more complicated for the Fed, which has to balance supporting job growth with fighting inflation. Raising interest rates can help tame inflation, but it can also slow economic growth as borrowing costs rise for households and businesses.